Saskatoon StarPhoenix

As Jana circled, Whole Foods CEO sought Amazon lifeline

- CRAIG GIAMMONA AND DEVIN BANERJEE Bloomberg

NEW YORK Whole Foods Markets CEO John Mackey was facing the worst crisis in his company’s history.

On April 10, activist hedge fund Jana Partners had announced an eight per cent stake and was agitating for an overhaul of the struggling grocery chain, potentiall­y including a sale.

That’s when Mackey recalled reading a report that Amazon. com had considered trying to buy Whole Foods.

A few days earlier, Bloomberg News reported that the e-commerce giant had mulled a bid last fall to help accelerate its push into the grocery business but didn’t pursue a deal.

That gave Mackey just the lifeline he needed.

On April 21, the Whole Foods chief authorized an outside consultant to contact Amazon, a filing to United States regulators on Friday shows.

“The consultant offered to make an introducto­ry phone call to a contact at Amazon.com to inquire whether there might be an interest in having an explorator­y meeting between the companies,” according to the filing, which provides details about the negotiatio­ns on the proposed merger.

About two months later on June 16, the e-commerce titan and the upscale grocer that helped bring organic food into the mainstream announced a deal, with Amazon agreeing to buy Whole Foods for US$42 a share, or about US$13.7 billion.

As the Amazon deal took shape, according to the filing, Whole Foods also entertaine­d interest from at least four private equity firms as well as “Company X,” which met with Mackey and his advisers to discuss a potential deal at US$35-US$40 a share.

That company was in fact the Albertsons grocery chain, according to a person familiar with the situation. Albertsons declined to comment.

In the end, Whole Foods decided not to seek formal offers from its private equity suitors, fearing leaks and believing that Amazon’s offer would be better. Amazon’s initial offer was for US$41 a share. Whole Foods countered Amazon at US$45 and eventually accepted the internet retailer’s “best and final” offer of US$42.

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